Many financial transactions involving financial instruments (e.g., stocks, bonds, commodities, etc.) are time-sensitive transactions. When information relating to a financial instrument (e.g., a price of the financial instrument) is disseminated to entities (e.g., traders, financial institutions, etc.), a particular entity may realize a profit if a financial transaction involving the financial instrument that was issued by the entity in response to receiving the disseminated information is the first financial transaction involving the financial instrument to be executed with respect to all other financial transactions involving the financial instrument in response to the disseminated information.
One technique for increasing the likelihood that the financial transaction involving the financial instrument issued by entity will be the first financial transaction involving the financial instrument is to minimize the time interval between (1) a time when time-sensitive information relating to the financial instrument is disseminated and (2) a time when a financial transaction server executes (i.e., fulfills) a financial transaction involving the financial instrument that was issued by an entity in response to receiving the time-sensitive information relating the financial instrument. One technique for minimizing this time interval is to reduce the network latency between a computer system of an entity and the financial transaction server. For example, the computer system for the entity may be coupled to the financial transaction server via a low-latency network. In another example, the computer system for the entity may be located within the same data center that houses the financial transaction server.
Another technique for increasing the likelihood that the financial transaction involving the financial instrument issued by entity will be the first financial transaction involving the financial instrument is for the entity to intercept and corrupt messages including financial transactions involving the financial instrument that were issued by other entities. Once the messages have been corrupted, the financial transaction server discards the message and accordingly, does not execute the financial transactions included in the discarded messages.
Unfortunately, these techniques create an inequity between entities that have the means to increase the likelihood that their financial transactions will be the first financial transaction to be executed by the financial transaction server.